Finance ministry rejects railways' request to bear pension expenses

Hit by a fall in revenue from freight and passenger traffic because of the Covid-19 pandemic, the Railways had approached the finance ministry requesting it to bear the pension liabilities
The finance ministry is not keen on bearing the pension liabilities of the Railways for the current fiscal year, as it feels the department is autonomous and should take corrective measures to generate resources.

 
Hit by a fall in revenue from freight and passenger traffic because of the Covid-19 pandemic, the Railways had approached the finance ministry requesting it to bear the pension liabilities for the current fiscal year.

 
“You (the Railways) cannot have both things — autonomy and shifting of pension liability to us. Everything comes in a package,” a key finance ministry source said.

 
He said Railways projects don’t even come to the finance ministry for approval. In fact, the department approves projects that are ten times its annual budget size, he said, adding this leads to cost and time overruns. The Railways should re-prioritise its projects and rationalise freight to generate resources, sources in the finance ministry said.

 
For 2020-21, staff cost and pension liabilities add up to about Rs 1.46 trillion for the Railways. Of this, staff cost was around Rs 92,993 crore while pension bill stood at Rs 53,000 crore.

 
The cumulative revenue from freight, passenger, and sundry segments reduced to Rs 53,725 crore during the six months ended September 30, a fall of Rs 34,257 crore or 39 per cent compared with the corresponding period last year.

 
The Railways is the only government department that meets pension expenditure from its own receipts through a pension fund that was introduced in 2003. The finance ministry meets this expense for all other departments.

 
Last year, the national transporter told the government that there was a sharp rise in staff cost after the Seventh Pay Commission’s recommendations were implemented. There was also an absence of commensurate growth in traffic earnings. This made it increasingly difficult to meet pension expenditure with its own revenues while bearing the social service obligations.

 
“Around 25 per cent of Railways’ earnings go into paying pension to 155 million former employees. We are hoping that it will be done in a graded manner,” Railway Board chairman VK Yadav said recently.

 
Cumulative revenue from freight traffic till October 11 this fiscal was down 15 per cent at Rs 53,631 crore. However, goods handled in September were up 19 per cent compared to a year ago. In the October 1-11 period, too, freight increased 13 per cent compared with a year ago.


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